Social e-commerce “business tips” on WeChat mini-programs!

There are three things in life that are intolerable: cold coffee, lukewarm champagne, and overexcited women.

—Orson Welles

This morning, the Securities Times reported that: In response to Reuters' report yesterday morning that " Luckin Coffee is seeking a new round of financing with a valuation of US$1.5 billion to US$2 billion," Luckin Coffee's public relations director Zhao Yanyan clearly responded that "this news is not accurate."

As for the specific financing scale and valuation of this round of financing, she said: "It is not convenient to disclose it now."

1. The road for the capital-filled "Little Blue Cup" to compete with Starbucks is not easy

As early as its early days, Luckin Coffee had put forward the slogan of "beating Starbucks" and even launched accusations against Starbucks for suspected monopoly. This move was interpreted by some as "riding on the popularity."

As a strong brand of new retail coffee, Luckin Coffee, which claims to have 1 billion yuan in capital, has entered the new retail coffee market where capital is the main competition. What’s interesting is that it is waving the banner of competing with Starbucks, but in fact it is circumventing Starbucks.

1. Luckin Coffee is attracting your attention or tearing your circle of friends apart

Different from Starbucks' model, the "little blue cup" created by Shenzhou first broke through the Internet .

The first step is to encourage people to try new products. By downloading the app and registering, they can get a free drink. Then, through Pinduoduo-style social fission marketing , they can share it with friends to generate consumption and get a free cup of coffee.

It is similar to Pinduoduo's bargaining app , but the cost of acquiring new users is obviously many times higher than Pinduoduo. The biggest advantage of this money-burning strategy is to quickly acquire traffic and exposure. I don't know whether Qian Zhiya is happy spending investors ' money, but users are indeed happy to get the benefits.

In addition to taking the path of social e-commerce , Luckin Coffee has also invested a large sum of money in advertising. Needless to say, Tang Wei and Zhang Zhen are very expensive. The Focus Media advertisements and film and television product placements in elevators have also penetrated into every corner. The brainwashing degree of "Who doesn't love this cup" is no less than that of Pinduoduo's magical advertising song.

1. Although Luckin Coffee has developed rapidly, its model of rapid expansion and money-burning marketing is still questioned by the outside world.

Luckin’s founder comes from the shared travel sector and is born with Internet genes, but for the food and beverage industry, the most fundamental thing is product quality.

Compared with Starbucks, the "No. 1 coffee company", apart from the brand image it has built over the years, Luckin Coffee lacks a mature supply chain system and offline store operation and management.

In the "coffee market", RMB players can certainly solve the problem of attracting new customers , but unlike other business scenarios, the key to profitability of a coffee shop is efficiency per square meter.

Fortunately, in the era of the Internet of Things, the coffee business can also find another way. It can temporarily put aside the efficiency issues and rental pressures of offline stores, and then target the gap in the freshly ground coffee delivery market.

2. Two factions and four tyrants in the coffee delivery war

Although Luckin Coffee has officially promoted the creation of four consumption scenarios - quick-service stores, takeaway kitchen stores, flagship stores and leisure stores, the latter two are only a handful in number, and its core business is still in quick-service stores and takeaway kitchen stores that do not provide dine-in services.

Coincidentally, another star Internet brand founded in 2014, Lian Coffee, was originally a coffee delivery platform with WeChat official accounts as the entrance. It mainly provided coffee delivery services such as Starbucks and Costa to accumulate users.

A year later, after accumulating a large number of users, Lian Coffee divested itself of the coffee delivery services of third-party brands such as Starbucks and established its own coffee delivery brand Coffee Box. It chose the "light landing" approach and built sites intensively. These sites are not coffee shops, but only serve as kitchens and warehouses. The requirements for factors such as geographical location and area are relatively low, and the cost is greatly compressed. This is similar to the "forward warehouse" model of MissFresh , and is completely different from the store, warehouse and distribution trinity of Luckin Coffee and HEMA Fresh.

As for the other group that can be compared with it, the two traditional brands - McDonald's and Starbucks - have launched iMcCafe delivery and Starbucks delivery services.

Last month, just after Starbucks announced the delivery of coffee on the Ele.me platform , McDonald's China also announced the launch of a delivery service for its "McCafe". Users can place orders through Meituan , Ele.me and the WeChat mini program "iMcCafe Delivery".

In terms of product categories, McCafé is not much different from Starbucks Delivery and Luckin Coffee. They all mainly provide various types of coffee, supplemented by desserts and light meals.

The difference is that McCafé continues McDonald’s fast food business model, providing breakfast and afternoon tea sets.

Starbucks, which focuses on creating the "third space", has given up the "third space" in some areas this time and chose to work with HEMA to build the world's first branded delivery kitchen - "Star Kitchen for Delivery", focusing on online orders.

This is undoubtedly a move by Starbucks to further integrate with Alibaba's ecosystem.

3. Why are catering giants flocking to the coffee delivery business?

Many people know that KFC and Costa actually started delivering coffee on food delivery platforms a long time ago, but this service has only become popular in China in the past year.

The coffee delivery market is huge, but no brand has ever been able to prove this. For the giants, coffee delivery is just a supplementary service of the stores.

The coffee delivery market is huge, but no brand has ever been able to prove this. For the giants, coffee delivery is just a supplementary service of the stores.

The rapid rise of Luckin Coffee, a local brand, thanks to its main delivery service, provides solid evidence.

At the same time, the "disruptor" Luckin Coffee's successful coffee delivery model has also provided inspiration to catering giants.

Prior to this, at the end of July this year, Starbucks released its third quarter financial report for fiscal year 2018, which showed that while global same-store sales increased by 1%, Starbucks' same-store sales in China fell by 2% year-on-year.

This financial report is called the "worst financial report" in Starbucks China's history.

In China, Starbucks, which focuses on opening stores crazily, has clearly felt the pressure of rent.

Data from Smith Street Business Consulting shows that 26% of the cost of a Starbucks latte is rent. At the same time, local Internet brand coffee and various milk tea drinks are constantly squeezing out coffee market share .

It can be seen from the Goldman Sachs report that among peer local Internet brands, high sales per square meter has become the key to Luckin Coffee, a newborn that has quickly become the second largest coffee chain brand in China.

But this is also the most difficult thing for other local coffee brands to overcome without capital support .

If Luckin Coffee’s wake-up call to catering giants, the rental pressure of coffee shops and capital constraints have determined that the giants must give up part of the “offline battlefield”, then the more important point is that the coffee delivery business is bound to become a weapon for catering giants to open up smart retail and seize traffic .

4. Coffee delivery business facilitated by mini programs

The popularity of food delivery platforms cannot directly drive vertically segmented food delivery services such as coffee delivery.

One month after Starbucks joined hands with Alibaba, Luckin Coffee announced a strategic partnership with Tencent on September 6. The two parties will jointly explore the application transformation of big data , mobile Internet , artificial intelligence and other technologies in offline scenarios and the intelligent marketing of WeChat applets, and jointly build Luckin Coffee's "smart retail" solution.

As a representative company of Internet coffee, Luckin Coffee is also growing at a very Internet-like speed.

This coffee brand, which was only launched on January 1, 2018, had completed the layout of more than 800 stores by August, served more than 3.5 million users, and sold more than 18 million cups. It even forced Starbucks to ask suppliers to take sides. It can be said to be a business legend in China in 2018.

A new Internet term has been derived from this market situation - calling a horse a zebra.

Robin Li once said: The Internet can rebuild many traditional industries.

The significance of Internet coffee to the traditional coffee industry lies in the reshaping of channels and costs .

The traditional coffee industry, represented by Starbucks, mainly develops offline stores, attaches importance to store location and decoration, and strives to create "a warm and comfortable third space in addition to the workplace and living residence."

In this case, all we can do is wait for customers to come.

Luckin Coffee is different. It uses internet thinking to make coffee, replacing the concept of "space" with "scene" , allowing coffee to adapt to various scenes. Users can enjoy coffee anytime and anywhere. This is exactly the same as the Lian Coffee mini program that "opened 1 million stores at 0 cost".

Just as Luckin Coffee’s slogan goes, “Let coffee find people, not people find coffee.” And this is exactly the subversion of the traditional coffee market.

1. How to get users to pay for their first cup of Luckin Coffee?

Here we have to mention the three pillars of Luckin Coffee’s WeChat marketing :

1. subsidy
2. Social fission
3. Precision Marketing

Subsidies are a strategy used in the early stages of O2O development, which takes advantage of the social dividends of mobile Internet , seizes the market through subsidies, and achieves overtaking.

As an Internet brand, Luckin Coffee can be said to have maximized the effectiveness of this mechanism in the Internet environment; starting from the first step of new registration, the first order reward is laid out.

When a user downloads the APP for the first time and successfully registers, he or she can receive a free cup of coffee, solving the problem of a single person's first attempt.

Fission is to achieve growth through Internet thinking.

If an old user successfully registers by recommending a friend, he or she can get another free drink, and the other party will also get a free drink. This old-to-new fission model solves the one-to-one fission problem.

Luckin Coffee’s red envelopes can be shared in WeChat groups , similar to takeout red envelopes, solving the one-to-many group fission problem.

Of course, Luckin’s various gameplays are also suitable for various scenarios.

“Coffee for you” allows you to give one or more cups of coffee to your friends anytime and anywhere, while “Buy two get one free, buy five get five free” and other offers promote group buying and boost sales.

Strong welfare subsidy forms can firmly grasp the user's social relationship chain and produce amazing fission effects. Data shows that the sales of the "Master" series reached 300,000 cups a day during the event, which is approximately equal to the total daily sales of 1,000 Starbucks stores.

Precise LBS positioning marketing, mainly online LBS marketing based on WeChat, repeatedly attracts traffic around stores.

Luckin Coffee has opened stores in a city that basically cover the main urban area. It will consider using WeChat Moments for brand advertising promotion , covering a few kilometers around, combining product and effect to further enhance the corporate image.

It is obvious: Luckin Coffee’s social fission marketing is now focusing on “burning money”.

While attracting attention with capital, as a new generation of the Internet, Luckin Coffee is cooperating with Tencent. We still don’t know whether, as the outside world says, Luckin Coffee is benchmarking Starbucks in terms of results rather than development path, or whether it will embark on a smart retail path to seize market share of Nestlé’s instant coffee .

However, the social system of Lian Coffee Mini Program, the subversion of traditional scenarios by Luckin Coffee Mini Program, and the trial of iMcCoffee delivery by offline giants all convey the following fact to us:

Whether it is online social + scenarios or offline intelligent marketing, the emergence of WeChat mini-programs has undoubtedly given coffee shops more room for imagination.

Source: Program Club